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Sunday, March 29, 2015

Endless options can be exhausting. We need to know when choice matters

Behavioural research suggests that we are prone to inertia, says the author of Nudge – hence we need to nurture our ability to discriminate

All over the world, taxis have installed credit card touchscreens, which makes three possible tips visible and simple for customers to select with a quick “touch”. In New York City, the suggested amounts are usually 20%, 25% or 30%. People are free to give a larger tip, a smaller tip or no tip at all, but it is easiest just to touch one of the three conspicuous options.

What are the effects of the suggested numbers? The economists Kareem Haggag and Giovanni Paci compiled data on more than 13m New York taxi rides. They found that the touchscreen has led to a significant increase in tips – by an average of more than 10%. If a driver makes $6,000 in tips in a year, the touchscreens lead to an automatic $600 raise; and the taxi industry as a whole will receive many millions of dollars in additional annual revenue.

Behavioural scientists have found that, in countless settings, defaults have a massive impact on our lives

For a pension plan, a privacy setting or a hire car agreement, any change in the default will require effort

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from Network Front | The Guardian More